Oregon PUC rejects PacifiCorp bid to trim PURPA contracts

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Dive Brief:

The Oregon Public Utility Commission yesterday rejected utility PacifiCorp's request to cut contracts under the federal Public Utility Regulatory Policies Act (PURPA) from 20 years to two.

However, the PUC proposed to reduce the eligibility cap for avoided costs prices in contracts to 3 MW for solar qualifying projects (QFs). The cap was previously set at 10 MW, and PacifiCorp pushed for regulators to cap wind and solar QFs at 100 kW.

Dive Insight:

Attempts to shorten PURPA contract lengths have sprouted up in the West in recent times. These efforts appeared to gain momentum after Idaho's utility regulators approved a request by the state's major utilities to reduce the 20-year contract to 2 years, but recent decisions in Utah and Oregon have stemmed the tide.

Oregon regulators said they will permanently modify the eligibility gap "due to unprecedented growth in QF activity in PacifiCorp's service territory," pending rulemaking from staff. The PUC chose 3 MW as the cap due to existing 3 MW QFs in PacifiCorp's territory, indicating the proposed size is viable.

The news comes as a blow to Warren Buffett's Berkshire Hathaway Energy, whose utilities have sought to shorten PURPA contract lengths in several states. In Oregon, PacifiCorp said in their initial filing that the significant uptick in proposed and finished GQs posed "significant price risk."

Oregon's decision follows behind Utah regulators' decision to partially reject a similar request from Rocky Mountain Power, a subsidiary of the Berkshire Hathaway-owned PacifiCorp. The Utah Public Service Commission chose to reduce the contracts to 15 years, pleasing clean energy advocates who claimed that the long term contracts are essential to securing renewables' place in the utility's evolving power mix. PacifiCorp, operating as Rocky Mountain Power in Idaho, was one of the utilities seeking the reduction in Idaho.

PURPA was initially signed into federal law in 1978 to ensure utilities were sourcing power from a diversity of companies and resources, not just themselves. The law opened the door to more renewable energy from a more diverse set of smaller producers.

While federal regulators set the standard for the size of qualifying facilities, state regulators have the authority to set rates and sign off on contracts. Clean energy advocates argue such contracts are essential to ensure renewables' growth in these states.

PURPA has come under increasing scrutiny with three Republican members of the U.S. Congress writing a letter to the Federal Energy Regulatory Commission asking that they schedule a technical conference to examine PURPA and consider changes based on changes in the market in the last four decades.

Berkshire Hathaway has pushed for changes to the law at the federal level, lobbying for the inclusion of a proposal to exempt many utilities from PURPA purchases in a broad energy bill unveiled by the House earlier this year. Lawmakers removed the proposal along with language aimed at curbing FERC's regulation of hydropower.